UK rental prices have skyrocketed to a new 14-year high, achieving the fastest annual growth since the 2008 financial crisis. Coupled with the unprecedented cost of living increases, private tenants across the country are finding it more and more difficult to make ends meet.
Data published by Zoopla this week indicates an 11% increase in private rental prices during the first three months of 2022, taking the average cost of renting a UK home to £995. This equates to an additional £88 per month, compared to average rents at the start of the pandemic.
According to Zoopla, this extraordinary growth is attributed to dwindling availability within the private renting sector and growing demand, pushing average monthly rents higher as inventory runs short.
Since 2016, total average monthly rental growth in the UK has topped 16%. However, UK rents have not kept pace with average wages or consumer price inflation, making it increasingly difficult for private renters to comfortably cover their outgoings. The UK CPI hit a 30-year high of 7% in March.
Significant increase in gross income spend on rent
Skyrocketing rents in key regions across the country have triggered a major spike in the proportion of gross income households are spending on their monthly rent. According to Zoopla, average rent outgoings now account for 37% of the typical single earner’s total income in the UK.
For those renting privately in London, the figure increases further to 52%, the highest level recorded since March 2020.
Over the course of 12 months, it now costs more than £20,000 to rent a typical home in London, according to the latest estimates from Zoopla.
“The tenancy renewal numbers we have seen so far in 2022 are unprecedented,” commented Gareth Atkins, Managing Director, Lettings at Foxtons.
“Steadily increasing demand, severely limited stock, and a swift rise in rental prices are all compelling reasons to renew, and renters are responding.”
A surge in post-pandemic demand
Following two years of fairly stagnant performance, average monthly rents in the capital are once again rising rapidly—up 15% at the end of Q1 this year. As the return to city living gains pace, so too does demand for properties in and around major cities like London.
“The surge of post-pandemic pent-up rental demand will normalise through Q2 and Q3, however, which means rental growth levels will start to ease,” said Gráinne Gilmore, head of research at Zoopla.
“Affordability considerations will also start to put a limit on further rental growth, although this may occur at different times depending on location.”
“Rents are likely to continue rising for longer in areas that have the most constrained stock levels—currently London, Scotland, and the South West.” Zoopla’s report also showed how average tenancy lengths have increased significantly over the past five years, up from 51 weeks in 2017 to 75 weeks.